MAA proposes RM7k-10k personal income tax rebate for xEV buyers in Budget 2027, RM5k for scrapping old cars

Ahead of Budget 2027‘s October 9 tabling in parliament, the Malaysian Automotive Association (MAA) has proposed personal income tax rebates for the purchase of electrified vehicles (xEV) and voluntary scrapping of old vehicles. xEVs comprise hybrids, plug-in hybrids (PHEV), battery-electric (EV) and fuel-cell vehicles.

MAA president Mohd Shamsor Mohd Zain told Bernama that the association recently submitted a proposal to the finance ministry suggesting a personal income tax rebate between RM7,000 and RM10,000 to accelerate xEV adoption, especially among middle-income taxpayers keen on xEVs but sensitive to the price.

“The move can reduce the upfront cost of xEV ownership and improve affordability for xEVs,” he said, adding that there is currently no direct purchase subsidy or tax rebate available for xEV buyers and that existing relief is mainly limited to charging equipment.

MAA proposed that the current RM2,500 individual income tax relief for home charging expenses be extended beyond 2027.

Shamsor said this would complement existing supply-side incentives by stimulating actual consumer demand rather than relying solely on manufacturers’ incentives, besides supporting Malaysia’s 2030 electrification target by encouraging buyers to bring forward their vehicle replacement decisions.

“This will create stronger market demand for locally-assembled xEVs, supporting manufacturers’ decisions to introduce additional completely-knocked-down (CKD) or locally-assembled xEV models and invest in local production. It will also improve the utilisation of Malaysia’s growing charging infrastructure, creating a positive cycle between EV adoption and charging-network investment,” he said.

MAA also proposed an end-of-life vehicle programme targeting vehicles aged 20 years and up, under which a RM5,000 personal income tax rebate would be offered per vehicle voluntarily retired and scrapped. This would complement the government’s matching grant programme and encourage owners of old cars to switch to newer, safer, more efficient and eco-friendly vehicles.

“The programme will also support fleet renewal, improve road safety, reduce emissions and stimulate domestic automotive demand,” Shamsor said, stressing that scrapping must be done by government-approved facilities.

The association also hopes that the government will consider extending the 100% green investment tax allowance (GITA) to charging point operators’ (CPO) investments and establish an automotive supplier capability development fund.

Suppliers are required by OEMs to invest in tooling, testing, validation, certification and automation before receiving any confirmed or sufficient sourcing volumes, and the initial investment could be hard to justify and finance for smaller suppliers, especially in developing xEV-related components, said the MAA president.

“This would assist in the transition towards xEVs, where Malaysian suppliers need to develop new capabilities in areas such as electric powertrain components, battery-related components, electronics, thermal management, lightweight materials and other next-generation automotive technologies.

“Strengthening of Tier 2 and 3 suppliers will help reduce dependence on imported components and build a stronger local automotive supply chain,” he said. What are your thoughts?

Add paultan.org as a preferred source on Google SearchAdd Follow paultan.org on Google NewsFollow